AGP Executive Report

Economic Outlook: Germany’s recovery lost momentum in the third quarter as weak industry, exports and domestic demand weighed on growth. Industrial orders fell 10.6% in August, while September inflation reached 3.3%, its highest since 2023. Airline Expansion: Lufthansa won Portugal’s backing to buy a 44.9% stake in TAP for €1.2bn, adding routes and a Lisbon hub to its European network. Banking: Crédit Agricole launched a German retail bank, building on around one million existing customers and targeting two million across its German businesses by 2028. AI Rules: A new study warns tighter access to AI data could cost Germany as much as €155bn a year, putting the debate over regulation and competitiveness in sharper focus.

Auto Industry: Volkswagen’s global deliveries fell 14.3% in the third quarter to 1.89 million vehicles, the steepest drop in more than four years. Sales in China plunged 38.5%, adding to pressure on German carmakers. Trade: EU leaders are weighing steps to counter a surge of Chinese manufactured-goods exports that threatens Europe’s industrial base and jobs, including in Germany. Energy Investment: Vattenfall has chosen Fluence to supply a 254-megawatt battery project at Brunsbüttel, with more than 1,000 megawatt-hours of storage planned by 2028. Digital Economy: The ifo Institute estimates tighter access to AI data could cost Germany €155 billion a year, underscoring the stakes for business as policymakers shape data rules. Prices: German inflation reached 3.3% in September, its highest rate since 2023. Transport: Ryanair plans to end flights to Bremen in April 2027, cutting around 500,000 seats as the airline complains of high German taxes and fees.

Automotive: BMW Group deliveries fell 6.3% in the third quarter, with China sales down 24.8%; fully electric sales in Europe rose 37.5%. Prices and risks: German inflation reached 3.3% in September, its highest since 2023. The IMF warned that a slump in AI investment, conflict and rising debt could weigh on global growth. Business climate: German business insolvencies rose 6.9% in the first seven months of the year, adding to pressure on companies. EU regulation: Germany, Belgium and Italy are seeking an “emergency brake” to halt new EU rules, while Berlin also presses for stronger trade defenses against China. Government: Alexander Schweitzer has taken over as labour minister after Bärbel Bas’s sudden resignation, as President Frank-Walter Steinmeier urged the coalition to show discipline and compromise.

Industrial Innovation: Schaeffler says its new formed gearboxes for humanoid robots cut manufacturing costs by more than 25% and could enter mass production in Germany in 2027. Siemens is also partnering with South Korea’s HD Hyundai on an AI-powered digital shipyard. Growth Outlook: The IMF raised its 2026 forecast for Germany to 1.3% from 0.7%, citing signs of recovery and stronger demand from trading partners. Auto Competition: European carmakers unveiled new models at the Paris show as Chinese brands push deeper into the market; an EU deal would cap Chinese hybrid imports at 350,000 a year. Business Strain: German insolvencies rose 6.9% in the first seven months, highlighting continued pressure on companies. Political Uncertainty: Labor Minister Bärbel Bas’s resignation has shaken the coalition, while Deutsche Bank’s CEO warns that political extremism could deter investment in Germany.

Political Uncertainty: Labour Minister Bärbel Bas has resigned, citing bereavement and attacks from within the coalition. Her departure adds pressure as pension and labour reforms remain stalled. Automotive Industry: Volkswagen’s third-quarter deliveries fell 14.3%, with China sales plunging 30%. An EU deal capping Chinese hybrid imports at 350,000 a year could offer some relief to European carmakers, though Chinese brands are expanding their push into the market. Industrial Investment: Verbio has commissioned a nearly €100 million plant in Bitterfeld to make up to 60,000 tonnes of bio-based chemicals annually, adding a new industrial use for renewable feedstock. Business Conditions: German insolvencies rose 6.9% in the first seven months of the year, while job postings fell 27% year on year in the second quarter. Exports, however, rose nearly 5% in August. Clean Energy: EWE will supply tesa’s Hamburg plant with 500 tonnes of green hydrogen annually, supporting the company’s emissions-cutting plans.

Auto Industry: Volkswagen’s global deliveries fell 14.3% in the third quarter, with China down 38.5% and Western Europe down 2.8%. CEO Oliver Blume urged shared responsibility for the carmaker’s overhaul and backed EU measures to strengthen local industry. Business Climate: Deutsche Bank’s chief called for faster reforms and more flexible labour rules, warning that political uncertainty could deter investors. German business insolvencies rose 6.9% in the first seven months. Trade and Output: German exports weakened over the summer, but industrial production climbed 2% in August and imports rebounded. Investment and Technology: German firms continue to expand in Romania, citing regional competitiveness. ZEISS also acquired Scottish holographics specialist Ceres to grow its manufacturing capabilities for transparent displays.

Auto Industry: Volkswagen CEO Oliver Blume backed EU “Made in Europe” rules, saying carmakers need fairer conditions as the company undertakes its biggest-ever restructuring. A preliminary EU-China deal to curb Chinese hybrid imports may ease pressure, but wider trade disputes remain. Business Outlook: Germany raised its 2026 growth forecast to 1.3%, though insolvencies rose 6.9% in the first seven months. Industrial production grew 2% in August, while exports unexpectedly fell. Energy Risks: EU gas storage stood at 72.4% in early October, its lowest seasonal level in more than a decade, raising concern over winter supply and costs for businesses. Sanctions: Berlin reaffirmed its Russia sanctions despite Washington’s diesel deal with Moscow, keeping energy policy at odds with the US shift.

Business Health: German business insolvencies rose 6.9% in the first seven months, underscoring continued pressure on firms. EU Budget Row: Berlin rejected a proposed €159 billion cut to the bloc’s 2028–34 budget as insufficient, setting up a dispute with France over spending priorities. Green Hydrogen: EWE and Verbund plan a 500-megawatt plant in Lower Saxony, targeting 50,000 tonnes of green hydrogen a year by 2032. China Trade: EU talks in Beijing produced an initial understanding to curb projected Chinese hybrid-car exports and ease rare-earth export licensing, but the Commission called it only a first step toward rebalancing trade. Industry and Exports: German industrial output rose 2% in August, its strongest gain in 17 months, despite weak car sales; machinery exports to India climbed 11% as firms seek markets beyond China.

Corporate Stress: German business insolvencies rose 6.9% in January–July to 15,185, with transport, hospitality and construction among the hardest-hit sectors. Workplace Shift: Deutsche Bahn will require staff to spend three days a week in the office, a move facing employee resistance. Energy and Industry: Berlin says it will maintain Russia sanctions despite a US easing on Russian diesel, while renewable-energy workers protested planned subsidy cuts. EU Budget: Germany and France are at odds over the bloc’s 2028–34 budget, with Berlin pressing for deep cuts and Paris arguing for more funding. Trade and Output: German factory output rebounded to an 18-month high in August, but exports weakened over the summer; machinery exports to India rose 11% as firms look beyond China.

Corporate Deal: Persistent has secured about 94% of German software firm Nagarro, clearing the way to combine it with its digital engineering business. Auto Regulation: Tesla has renamed its driver-assistance software “Tesla Assisted Driving” in Europe after German regulators warned the Full Self-Driving label could mislead motorists; EU-wide approval remains pending. Economic Outlook: Berlin has raised its 2026 growth forecast to 1.3%, but exports weakened over the summer and factory orders slumped in August, underscoring the recovery’s fragility. Industry: Speira opened a €40 million recycling furnace in Neuss, capable of processing 60,000 tonnes of beverage-can scrap a year and expanding Europe’s recycled-aluminium supply. Trade Policy: German experts urged the EU to prepare tougher measures against China, including faster action against dumping and subsidies, as concerns grow over pressure on European industry. Business Conditions: German insolvencies rose 6.9% in the first seven months of the year, adding to pressure on companies navigating a subdued economy.

Company Pressures: German business insolvencies rose 6.9% in the first seven months of 2026, reaching 15,185. Transport and storage firms were among the hardest hit, as high energy and labour costs continue to weigh on companies. Economic Outlook: The government raised its 2026 growth forecast to 1.3%, but the recovery remains fragile: exports weakened over the summer and August factory orders plunged 10.6%, despite a 2% rise in industrial production. Trade and Industry: The EU and China reached a deal aimed at cutting Chinese hybrid and plug-in hybrid car exports to Europe by more than half over four years. Germany also reported an 11% rise in machinery exports to India, as firms seek markets beyond China. Investment and Markets: The EU named AMG Lithium’s Bitterfeld refinery and Zinnwald project strategic, backing efforts to build European battery-material supply chains. EU finance ministers also agreed to expand the markets watchdog ESMA’s oversight, aiming to make cross-border investment easier. Technology Ties: Britain and Germany launched an industrial technology corridor to boost cooperation in AI and deep tech.

Uneven Recovery: Germany raised its 2026 growth forecast to 1.3%, but the rebound remains fragile: industrial output climbed 2% in August while factory orders slumped, exports fell and imports recovered. UK-German Business Links: The two countries launched an industrial technology corridor focused initially on AI, aiming to connect tech firms with industrial customers and investors; no shared deployment budget has been set. Trade and Investment: Germany blocked China’s COSCO from acquiring freight company Zippel as Berlin and Paris push for faster EU tools to counter trade distortions. Corporate Moves: Apollo made a non-binding bid for German energy company Uniper, while China’s Anta completed a €1.51 billion purchase of a 29.06% stake in Herzogenaurach-based Puma, becoming its largest shareholder.

Economic Outlook: Germany raised its 2026 growth forecast to 1.3%, while factory output climbed 2% in August to its highest level in 18 months. But exports fell unexpectedly, underscoring the recovery’s uneven footing. Automotive Industry: Audi’s Neckarsulm plant needs a “viable” future, CEO Gernot Döllner told workers. The site employs about 15,000 people and is among four VW Group plants facing possible closure from 2031 as the carmaker seeks to cut costs and improve competitiveness. Trade and Investment: Berlin blocked China’s COSCO from acquiring freight company Zippel, amid wider European calls for tougher trade tools against Beijing. Apollo has also submitted a non-binding bid for German energy firm Uniper, adding to scrutiny of the company’s future ownership.

Industrial Output: German factory production rose 2% in August, its strongest monthly gain in 17 months, despite weak car sales. But factory orders fell sharply, underscoring how fragile the recovery remains. Auto Restructuring: Porsche plans to cut about a quarter of its workforce and focus on pricier sports cars as China demand weakens and its profit margin plunges. Strategic Assets: Berlin blocked China’s COSCO from buying 80% of logistics firm Zippel, citing national-security concerns over its defence and NATO-related role. Energy: RWE, Equinor and Brookfield are among the reported bidders for Uniper, which remains more than 99% state-owned; Berlin plans to retain a blocking stake. Startup Funding: Bavarian agri-tech firm Finches raised €2 million to develop AI tools that warn food, pharmaceutical and cosmetics companies about supply-chain risks. UK-Germany Ties: Chancellor Friedrich Merz and UK Prime Minister Andy Burnham are due to launch a security partnership and convene business leaders to discuss investment and industrial cooperation.

Industrial Outlook: German industrial output rose 2% in August, despite an auto-sector slump, but factory orders fell 10.6% as large contracts dried up — a mixed picture for a recovery that remains fragile. Trade and Industry: France and Germany are pressing the EU for stronger tools against trade distortions, with China a central concern. Müller plans to close two German factories, while Berlin blocked the sale of logistics firm Zippel to China’s Cosco. Energy Investment: Grid operator Amprion raised €1.5 billion for network expansion, and Copenhagen Infrastructure Partners committed $173 million to support MaxSolar’s German renewables projects. Factory Technology: Augsburg-based Plus10 teamed with Arburg to demonstrate AI software that recommends injection-moulding settings; the startup says it can reduce scrap by up to 20%.

Espionage Shock in Berlin: German prosecutors arrested former BND chief August Hanning and his ex–chief of staff on suspicion of espionage and attempted high treason, alleging Hanning received thousands of classified documents for paid analysis work. EU Trade Power Push: France and Germany urged the EU to create tougher trade tools, including an expedited “cut-off” from the single market, as China warned against protectionism and called for WTO-aligned openness. Industrial Pulse: Destatis said German industrial production rose 2.0% in August (vs. a 0.5% forecast), led by construction, while energy output fell. Rail Overhaul Plan: Germany’s transport ministry unveiled a 2026–2030 “Infraplan” roadmap for track, electrification, digitization and station upgrades, with targets but no dedicated financing yet. Energy & Markets: Shell flagged a jump in refining margins to $42/bbl amid higher fuel prices, while IMF chief Kristalina Georgieva warned high debt and energy shocks could derail global growth. Cyber Habits Gap: A new study highlights that even with high passkey awareness, many enterprise staff still rely on passwords, leaving organizations exposed to phishing and deepfake attacks.